New Shanghai COVID-19 Rules Darken China Luxury Market Outlook – WWD

SHANGHAI — A policy announcement by the Shanghai government on Tuesday requiring newcomers to stay away from public places for five days will likely put even more pressure on the local luxury retail market.

From Thursday, people entering Shanghai will be barred from entering public places, including restaurants, bars, malls, malls, supermarkets, indoor gyms and internet cafes, for five days after check-in.

People traveling to Shanghai are required to take three nucleic acid tests on three consecutive days, the final test on their fifth day in the city, before being allowed to travel freely with code green.

The government said it would “dynamically adjust” the new rules according to the evolution of the pandemic.

China reported more than 29,700 new cases Wednesday, hitting a record high since the Shanghai outbreak in April. Shanghai reported nine confirmed cases of COVID-19 and 58 asymptomatic cases on Wednesday

After an online backlash, the Shanghai government revised regulations on Thursday, adding a whitelist for interstate workers who can bypass the five-day rule.

According to a report by Barclays, the latest restrictions in one of China’s most important luxury centers will bring “an additional headwind to luxury sales in China in the fourth quarter.”

“Shanghai’s announcement yesterday is particularly relevant to the luxury sector, as it has effectively prevented non-local luxury consumers from making short to medium-length shopping trips to the city,” the report said on Wednesday.

According to an earlier report by Barclays in September, non-local customers can contribute up to 50 percent of sales to malls in major cities like Shanghai and Beijing.

The tightening came as cases surged in major centers like Beijing, Guangzhou and Chongqing after Beijing re-enacted a 20-step rule aimed at easing restrictions on COVID-19.

The 20-step guide, announced less than three weeks ago, lifted flight bans and reduced quarantine time for international travelers to five days at central quarantine centers and three days at home.

Quarantine requirements for locally infected persons and close contacts have also been reduced from seven days to five days.

But while Beijing still adheres to its “zero COVID-19” policy, local authorities have come under pressure to enforce rules that avoid excessive restrictions while reducing new cases.

Shijiazhuang, a northern city not far from the capital, was the first to relax COVID-19 measures, but returned to daily mass testing for five consecutive days after local cases rose to over 600 a day.

Guangzhou’s south center imposed a five-day lockdown in its largest district on Monday, suspending public transport and canceling in-person classes for schools. Guangzhou reported more than 8,000 new cases on Wednesday.

Following the introduction of new rules in Shanghai, cities such as Shenzhen, Nanchang, Xi’an, Sanya, Zhengzhou and Harbin followed the same policies. Travel restrictions for new arrivals ranged from three to five days. Local governments also urged residents to cancel travel plans if possible.

Time will tell how the COVID-19 disruption and weak consumer sentiment will affect the appetite for luxury goods. Barclays previously stated that luxury sales in the Asia Pacific region will increase by about 5 percent in the second half of 2022 unless severe lockdowns are implemented in key cities.

“The development over the next few weeks may be key as we approach the Chinese New Year holiday, which falls on January 22, 2023 and is one of the most important periods for interregional travel in China,” Barclays said. notice.

According to a Goldman Sachs report published on Nov. 6, China will most likely exit its “zero COVID-19” policy in the second quarter of 2023, after the second Congress of the Party, which President Xi Jinping will renew. presidential

Leave a Reply